We have shown in the previous funding cycle that we can produce cells from human induced pluripotent stem cells that display most characteristics associated with hepatocytes. The differentiation of the cells is synchronous, reproducible, and highly efficient with 85% of cells in the culture dish assuming a hepatic character. Moreover, iPS cell-derived 'hepatocytes' are metabolically active, are capable of performing most functions associated with mature liver cells, and can engraft into the mouse hepatic parenchyma. We propose that the differentiation of 'hepatocytes' from human iPS cells provides a model to study hepatocyte disease and development. In the current submission we will use this model to identify novel transcriptional regulatory pathways that control the onset of hepatocyte differentiation, and ii) use iPS cells generated from patients to determine whether the hepatocyte dysfunction contributes to the pathophysiology of Maturity Onset Diabetes of the Young (MODY).